During the past year, we’ve posted several times on the progress that states and the federal government are making in setting rules for, building, and starting to market the online health insurance exchanges that were a hallmark of the health reform law. The exchanges, which will open for enrollment in October, are generally seen as a good new resource for individuals and families who lack access to employer-sponsored coverage, and states have been working quickly to get them up and running in time.
Given this progress, it may be easy to forget that in addition to individuals and families, small businesses are another target group for the exchanges. The Small Business Health Options Program (SHOP), also established through the 2010 health law, was created to give workers at small businesses a choice of health insurance plans. Like the individual market exchanges, SHOP will allow consumers to directly compare plans and prices, as well as aggregate and simplify enrollment and payment, according to a fact sheet on the program from Healthcare.gov. Premiums for SHOP plans will vary only by age and smoking status, and won’t be affected by the size of the business. States have the option of keeping the individual and small business exchanges separate or merging them into one program.
SHOP exchanges were originally scheduled to open next January, but, writes Robert Pear in an article for the New York Times, federal officials have decided to postpone its launch by one year. Citing operational challenges as a reason for the delay, states will have to give small business employees only one choice of plan in 2014, with broader options available in 2015.
Drew Armstrong, in a piece for Bloomberg, explains that the delay applies only to the states using the federal exchange, not those running their own exchange. While the federal requirement to provide choices has been delayed, many states with state-run exchanges are planning to provide them anyway, according to an article by Kelly Kennedy of USA Today.
Small business associations and advocates largely criticized the delay, explaining that small business plans were a major selling point of the health law to them. Health coverage is a big expense for small businesses, which have fewer employees among whom to divide the risk. Having a choice between several plans would push down premiums through competition and allow employees to get exactly the coverage they want, added a small business owner quoted in Mr. Pear’s article.
Health insurance companies, however, cited the challenges that Massachusetts experienced in setting up an exchange for employees that provided choices. Given that the Department of Health and Human Services (HHS) did not release detailed guidelines on SHOP exchanges until last month, states may not have enough time to use that guidance and launch by next year.
Readers, do you or your loved ones work in a small business? If so, are you planning to get coverage through a SHOP exchange next year or sometime in the future?